Gov. Arnold Schwarzenegger and the Legislature could be headed for a high-stakes game of chicken as the deadline approaches at midnight Sunday for the governor to sign or veto more than 700 bills that are on his desk.

The governor has made a veiled threat to issue a mass veto unless lawmakers reach agreement on an overhaul of the state's water system. A mass veto, legislative leaders said, would be both "silly" and inexcusable, and it would effectively wipe out nearly all the work done by the Legislature the past 10 months.

"Water is an extremely important issue, but the ... bills from the Assembly that are on the governor's desk represent a multitude of issues that are very important to Californians," said Assembly Speaker Karen Bass, D-Baldwin Vista (Los Angeles County), after a meeting with the governor and other legislative leaders Tuesday. She added, "A mass vetoing is never an appropriate use of his veto power."

Bills on the governor's desk range from mundane to massive - on subjects such as education, Harvey Milk Day and ammunition restrictions.

Bass and state Senate President Pro Tem Darrell Steinberg, D-Sacramento, both said they were optimistic that the governor would not issue a mass veto, and Steinberg called the threat "silly." But Aaron McLear, a Schwarzenegger spokesman, would not say flatly that it was off the table.

"We'll consider all the bills on their merits, but right now we're focused on pushing the Legislature toward an agreement on water," McLear said.

Investigation sought

Assembly Majority Leader Alberto Torrico, D-Fremont, called on Attorney General Jerry Brown on Tuesday to investigate the governor, saying his veto threat amounted to extortion. Torrico is a candidate to replace Brown in 2010. Brown spokesman Scott Gerber said the attorney general would comment after his office had the chance to review the request.

Legislative leaders and major water interest groups, including environmental organizations and water users, are meeting privately throughout the week trying to resolve a number of major outstanding issues, including how to pay for an overhaul and how to guarantee water rights for entities including the San Francisco Public Utilities Commission and the East Bay Municipal Utility District.

Both the governor and Democratic and Republican leaders have a self-imposed deadline of midnight Friday to reach a water deal, which McLear said could mean an agreement could be reached between the leaders and the stakeholders. The Legislature would then have to vote on the deal. The Senate plans to reconvene next week, and the Assembly has yet to set a meeting date.

The governor has 30 days to act on legislation after the session's end, which was midnight Sept. 11, and he typically works through the bills during that time and announces his actions as he goes. If the governor takes no action, the bills will become law without his signature, but Schwarzenegger has rarely, if ever, done that.

Only 3 bills signed

Since the end of the legislative session, Schwarzenegger has signed only three bills: deferring some payments for education to help the state's cash crisis, reinstating money for children's health insurance and creating a day honoring Vietnam War veterans.

Still on his desk are bills that would provide $400 million owed to 500 schools in the state, increase federal funding to hospitals by $2.3 billion and create stricter rules for mortgage lenders, among hundreds of others. More controversial proposals include designating a day to honor slain San Francisco Supervisor Harvey Milk and restrictions on the sale of ammunition, and a phasing out of gun shows at the Cow Palace.

The governor may already have signed or vetoed bills and is holding onto them, but his spokesman McLear said there would be no announcement until the bills are "finalized," which means either sent back to the Legislature with a veto or to the secretary of state with a signature.

Legislative leaders also could reconvene their houses and pull all the bills back from the governor's desk and submit them at a later date, which Steinberg said Schwarzenegger has brought up in conversations. Both he and Bass said they would not take that action.